First Financial Corporation Reports First Quarter Results
04/25/2023 - 02:00 PM
TERRE HAUTE, Ind., April 25, 2023 (GLOBE NEWSWIRE) -- First Financial Corporation (NASDAQ:THFF) today announced results for the first quarter of 2023.
Net income was $16.0 million compared to the $20.9 million reported for the same period of 2022, which included the proceeds of a legal settlement and pandemic related reserve releases, both of which were non-recurring events; Diluted net income per common share of $1.33 compared to $1.67 for the same period of 2022; Return on average assets was 1.32% compared to 1.63% for the three months ended March 31, 2022; Credit loss provision was $1.8 million compared to negative provision of $6.6 million for the first quarter 2022; and Pre-tax, pre-provision net income was $21.4 million compared to $19.7 million for the same period in 2022.1 1 Non-GAAP financial measure that Management believes is useful for investors and management to understand pre-tax profitability before giving effect to credit loss expense and to provide additional perspective on the Corporation’s performance over time as well as comparison to the Corporation’s peers and evaluating the financial results of the Corporation – please refer to the Non GAAP reconciliations contained in this release.
Average Total Loans
Average total loans for the first quarter of 2023 were $3.07 billion versus $2.78 billion for the comparable period in 2022, an increase of $292 million or 10.5% . On a linked quarter basis, average loans increased $53 million or 1.76% from $3.02 billion as of December 31, 2022.
Total Loans Outstanding
Total loans outstanding as of March 31, 2023, were $3.08 billion compared to $2.80 billion as of March 31, 2022, an increase of $275 million or 9.82% , primarily driven by increases in Commercial Construction and Development, Commercial Real Estate, and Consumer Auto loans. On a linked quarter basis, total loans increased $12.6 million or 0.41% from $3.07 billion as of December 31, 2022.
“We are pleased with our first quarter results, as we experienced another quarter of loan growth and expansion of our net interest margin, contributing to our eighth consecutive quarter of net interest income growth. Our pre-tax, pre-provision net income was at near record levels and expenses were well controlled,” said Norman L. Lowery, Chairman and Chief Executive Officer. “With the turbulent environment that arose in the financial services industry towards the end of the quarter, our balance sheet remains strong, our liquidity is stable, and our capital levels remain strong.”
Average Total Deposits
Average total deposits for the quarter ended March 31, 2023, were $4.25 billion versus $4.43 billion as of March 31, 2022.
Total Deposits
Total deposits were $4.17 billion as of March 31, 2023, compared to $4.40 billion as of March 31, 2022. On a linked quarter basis, total deposits decreased $203.5 million , or 4.66% from $4.37 billion .
Shareholder Equity
Shareholder equity at March 31, 2023, was $505.5 million compared to $525.4 million on March 31, 2022. The decrease resulted in part from the return of $18.0 million of capital to shareholders through the repurchase of 413,311 shares of the Corporation’s common stock, as well as a $0.54 semi-annual dividend and a $0.20 special dividend paid in the first quarter of 2023. The possible repurchase of an additional 830,220 shares remain under the current authorization. The decrease in equity is also reflective of higher interest rates which affected the accumulated other comprehensive income (“AOCI”) on investments available for sale. AOCI decreased $55 million in comparison to March 31, 2022, but increased $14 million in comparison to December 31, 2022.
Book Value Per Share
Book Value per share was $41.89 at March 31, 2023, compared to $42.25 at March 31, 2022, partially driven by the aforementioned return of capital to our shareholders. On a linked quarter basis, the March 31, 2023 book value per share is a 6.21% increase over the December 31, 2022 book value per share of $39.44 .
Tangible Common Equity to Tangible Asset Ratio
The Corporation’s tangible common equity to tangible asset ratio was 8.63% at March 31, 2023, compared to 8.65% at March 31, 2022, partially driven by the aforementioned share repurchases.
Net Interest Income
Net interest income for the first quarter of 2023 was $44.3 million , compared to $37.8 million reported for the same period of 2022, an increase of $6.5 million or 17.25% . Notwithstanding increased funding costs and two fewer days in the quarter, on a linked quarter basis net interest income increased $677 thousand or 1.55% from the quarter ended December 31, 2022.
Net Interest Margin
The net interest margin for the quarter ended March 31, 2023, was 3.96% compared to the 3.16% reported at March 31, 2022, an increase of 80 basis points or 25.32% . On a linked quarter basis, the net interest margin increased 15 basis points from 3.81% as of December 31, 2022. Loan yield increased 29 basis points quarter over quarter, while the cost of interest-bearing deposits increased 21 basis points.
Nonperforming Loans
Nonperforming loans as of March 31, 2023, were $12.1 million versus $8.4 million as of March 31, 2022. The ratio of nonperforming loans to total loans and leases was 0.39% as of March 31, 2023, versus 0.30% as of March 31, 2022.
Credit Loss Provision
The provision for credit losses for the three months ended March 31, 2023, was $1.8 million , compared to negative provision of $6.6 million for the first quarter 2022, which took into account revised assumptions resulting in reserve releases following pandemic period increases.
Net Charge-Offs
In the first quarter of 2023 net charge-offs were $2.0 million compared to $1.2 million in the same period of 2022.
Allowance for Credit Losses
The Corporation’s allowance for credit losses as of March 31, 2023, was $39.6 million compared to $40.5 million as of March 31, 2022. The allowance for credit losses as a percent of total loans was 1.29% as of March 31, 2023, compared to 1.44% as of March 31, 2022. On a linked quarter basis, the allowance for credit losses as a percent of total loans decreased 1 basis point from 1.30% as of December 31, 2022.
Non-Interest Income
Non-interest income for the three months ended March 31, 2023 and 2022 was $9.4 million and $13.7 million , respectively. Non-interest income for the first quarter of 2022 included the aforementioned legal settlement of $4.0 million .
Non-Interest Expense
Non-interest expense for the three months ended March 31, 2023, was $32.3 million compared to $31.3 million in 2022, reflecting strong expense control. This increase is inclusive of an 83.88% increase in FDIC assessments from $428 thousand in the first quarter of 2022 to $787 thousand for the same period in 2023. Salaries increased $118 thousand or 0.91% to $13.1 million in the first quarter of 2023 versus the same period in 2022 and includes a $15 m inimum hourly wage adopted in September 2022 as well as a 4.2% merit increase for 2023.
Efficiency Ratio
The Corporation’s efficiency ratio was 58.73% for the quarter ending March 31, 2023, versus 59.54% for the same period in 2022.
Income Taxes
Income tax expense for the three months ended March 31, 2023, was $3.6 million versus $5.8 million for the same period in 2022. The effective tax rate for 2023 was 18.42% compared to 21.79% for 2022. Pretax income for the first quarter 2022 was significantly higher than pretax income for first quarter 2023. Since our permanent differences remained similar, income was the driving factor for the decrease in effective tax rate.
About First Financial Corporation
First Financial Corporation (NASDAQ:THFF) is the holding company for First Financial Bank N.A. First Financial Bank N.A., the fifth oldest national bank in the United States, operates 71 banking centers in Illinois, Indiana, Kentucky and Tennessee. Additional information is available at www.first-online.bank.
Investor Contact:
Three Months Ended March 31, December 31, March 31, 2023 2022 2022 END OF PERIOD BALANCES Assets $ 4,866,821 $ 4,989,281 $ 5,081,794 Deposits $ 4,165,398 $ 4,368,871 $ 4,395,190 Loans, including net deferred loan costs $ 3,080,044 $ 3,067,438 $ 2,804,650 Allowance for Credit Losses $ 39,620 $ 39,779 $ 40,516 Total Equity $ 505,499 $ 475,284 $ 525,444 Tangible Common Equity(a) $ 412,118 $ 381,585 $ 431,629 AVERAGE BALANCES Total Assets $ 4,851,484 $ 4,930,611 $ 5,149,642 Earning Assets $ 4,613,126 $ 4,690,594 $ 4,927,680 Investments $ 1,407,944 $ 1,393,753 $ 1,468,471 Loans $ 3,068,716 $ 3,015,903 $ 2,777,168 Total Deposits $ 4,252,161 $ 4,383,505 $ 4,427,806 Interest-Bearing Deposits $ 3,407,590 $ 3,509,416 $ 3,525,766 Interest-Bearing Liabilities $ 96,160 $ 84,210 $ 106,005 Total Equity $ 487,834 $ 438,767 $ 565,123 INCOME STATEMENT DATA Net Interest Income $ 44,335 $ 43,658 $ 37,811 Net Interest Income Fully Tax Equivalent(b) $ 45,654 $ 44,724 $ 38,908 Provision for Credit Losses $ 1,800 $ 2,725 $ (6,550 ) Non-interest Income $ 9,375 $ 10,568 $ 13,738 Non-interest Expense $ 32,321 $ 32,501 $ 31,344 Net Income $ 15,980 $ 16,521 $ 20,924 PER SHARE DATA Basic and Diluted Net Income Per Common Share $ 1.33 $ 1.37 $ 1.67 Cash Dividends Declared Per Common Share $ — $ 0.74 $ — Book Value Per Common Share $ 41.89 $ 39.44 $ 42.25 Tangible Book Value Per Common Share(c) $ 34.16 $ 28.67 $ 34.71 Basic Weighted Average Common Shares Outstanding 12,058 12,037 12,538
_______________________________75% .
Key Ratios Three Months Ended March 31, December 31, March 31, 2023 2022 2022 Return on average assets 1.32 % 1.34 % 1.63 % Return on average common shareholder's equity 13.10 % 15.06 % 14.81 % Efficiency ratio 58.73 % 58.78 % 59.54 % Average equity to average assets 10.06 % 8.90 % 10.97 % Net interest margin(a) 3.96 % 3.81 % 3.16 % Net charge-offs to average loans and leases 0.26 % 0.32 % 0.18 % Credit loss reserve to loans and leases 1.29 % 1.30 % 1.44 % Credit loss reserve to nonperforming loans 328.06 % 414.36 % 481.24 % Nonperforming loans to loans and leases 0.39 % 0.31 % 0.30 % Tier 1 leverage 11.30 % 10.78 % 9.94 % Risk-based capital - Tier 1 14.27 % 13.58 % 14.46 %
________________________________
Asset Quality Three Months Ended March 31, December 31, March 31, 2023 2022 2022 Accruing loans and leases past due 30-89 days $ 18,934 $ 28,875 $ 13,698 Accruing loans and leases past due 90 days or more $ 1,157 $ 1,119 $ 707 Nonaccrual loans and leases $ 10,920 $ 8,481 $ 7,712 Other real estate owned $ 336 $ 337 $ 236 Nonperforming loans and other real estate owned $ 12,413 $ 9,937 $ 13,197 Total nonperforming assets $ 15,327 $ 12,923 $ 16,728 Gross charge-offs $ 4,376 $ 4,388 $ 3,254 Recoveries $ 2,417 $ 1,947 $ 2,015 Net charge-offs/(recoveries) $ 1,959 $ 2,441 $ 1,239
Non-GAAP Reconciliations Three Months Ended March 31, 2023 2022 ($in thousands, except EPS) Income before Income Taxes $ 19,589 $ 26,755 Provision for credit losses 1,800 (6,550 ) Provision for unfunded commitments — (500 ) Pre-tax, Pre-provision Income $ 21,389 $ 19,705
CONSOLIDATED BALANCE SHEETS March 31, December 31, 2023 2022 (unaudited) ASSETS Cash and due from banks $ 82,621 $ 222,517 Federal funds sold 12,931 9,374 Securities available-for-sale 1,340,781 1,330,481 Loans: Commercial 1,798,240 1,798,260 Residential 675,978 673,464 Consumer 598,299 588,539 3,072,517 3,060,263 (Less) plus: Net deferred loan costs 7,527 7,175 Allowance for credit losses (39,620 ) (39,779 ) 3,040,424 3,027,659 Restricted stock 15,384 15,378 Accrued interest receivable 20,402 21,288 Premises and equipment, net 68,158 66,147 Bank-owned life insurance 116,117 115,704 Goodwill 86,985 86,985 Other intangible assets 6,396 6,714 Other real estate owned 336 337 Other assets 76,286 86,697 TOTAL ASSETS $ 4,866,821 $ 4,989,281 LIABILITIES AND SHAREHOLDERS’ EQUITY Deposits: Non-interest-bearing $ 830,233 $ 857,920 Interest-bearing: Certificates of deposit exceeding the FDIC insurance limits 58,476 50,608 Other interest-bearing deposits 3,276,689 3,460,343 4,165,398 4,368,871 Short-term borrowings 108,584 70,875 FHLB advances 34,585 9,589 Other liabilities 52,755 64,653 TOTAL LIABILITIES 4,361,322 4,513,988 Shareholders’ equity Common stock, $.125 stated value per share; Authorized shares-40,000,000 Issued shares-16,137,220 in 2023 and 16,114,992 in 2022 Outstanding shares-12,065,888 in 2023 and 12,051,964 in 2022 2,012 2,012 Additional paid-in capital 143,408 143,185 Retained earnings 630,809 614,829 Accumulated other comprehensive income/(loss) (125,589 ) (139,974 ) Less: Treasury shares at cost-4,071,332 in 2023 and 4,063,028 in 2022 (145,141 ) (144,759 ) TOTAL SHAREHOLDERS’ EQUITY 505,499 475,293 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 4,866,821 $ 4,989,281
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME Three Months Ended March 31, 2023 2022 INTEREST INCOME: Loans, including related fees $ 44,595 $ 32,357 Securities: Taxable 6,236 4,583 Tax-exempt 2,598 2,348 Other 1,271 365 TOTAL INTEREST INCOME 54,700 39,653 INTEREST EXPENSE: Deposits 9,527 1,676 Short-term borrowings 808 82 Other borrowings 30 84 TOTAL INTEREST EXPENSE 10,365 1,842 NET INTEREST INCOME 44,335 37,811 Provision for credit losses 1,800 (6,550 ) NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 42,535 44,361 NON-INTEREST INCOME: Trust and financial services 1,317 1,372 Service charges and fees on deposit accounts 6,818 6,654 Other service charges and fees 204 106 Securities gains (losses), net — 5 Interchange income 47 118 Loan servicing fees 285 359 Gain on sales of mortgage loans 180 662 Other 524 4,462 TOTAL NON-INTEREST INCOME 9,375 13,738 NON-INTEREST EXPENSE: Salaries and employee benefits 17,158 17,342 Occupancy expense 2,599 2,522 Equipment expense 3,299 2,907 FDIC Expense 787 428 Other 8,478 8,145 TOTAL NON-INTEREST EXPENSE 32,321 31,344 INCOME BEFORE INCOME TAXES 19,589 26,755 Provision for income taxes 3,609 5,831 NET INCOME 15,980 20,924 OTHER COMPREHENSIVE INCOME (LOSS) Change in unrealized gains/(losses) on securities, net of reclassifications and taxes 14,238 (68,914 ) Change in funded status of post retirement benefits, net of taxes 147 315 COMPREHENSIVE INCOME (LOSS) $ 30,365 $ (47,675 ) PER SHARE DATA Basic and Diluted Earnings per Share $ 1.33 $ 1.67 Weighted average number of shares outstanding (in thousands) 12,058 12,538
